Dealing With New Formulary Types: Health System Outpatient Formularies

Developers and utilizers of clinical pathways need to understand that formulary systems encompass more than merely a list of medications approved by a managed care organization. These stakeholders should also factor in that, as hospitals have expanded into large health systems with vast outpatient networks, multiple formularies are now common. Health systems increasingly have an inpatient, health plan, and now outpatient formulary, each with their own rules, priorities, and application. These differences and complexities are important to consider to optimize clinical pathway outcomes.

Clinical pathways used to be a one-size-fits-all proposition, but they need to be flexible to adjust for different environments and evolve alongside care delivery. With changes in care and payment models, which sometimes vary even within a single health system, adjustments in clinical pathways are needed to accommodate multiple factors including highly variable formularies.

The Academy of Managed Care Pharmacist (AMCP) has defined a drug formulary, or preferred drug list, as a continually updated list of medications and related products supported by current evidence-based medicine, judgment of physicians, pharmacists, and other experts in the diagnosis and treatment of disease and preservation of health.1 The primary purpose of the formulary is to encourage the use of safe, effective, and affordable medications. They go further by describing formulary management as an integrated patient care process that enables physicians, pharmacists, and other health care professionals to work together to promote clinically sound, cost-effective medication therapy and positive therapeutic outcomes. Effective use of health care resources can minimize overall medical costs, improve patient access to more affordable care, and provide an improved quality of life.

More Than a List of Medications

It is critical for developers and users of clinical pathways to appreciate that formulary systems are much more than a list of medications approved for use by a managed health care organization. A formulary system includes the methodology an organization uses to evaluate clinical and medical literature and the approach for selecting medications for different diseases, conditions, and patients. Policies and procedures for the procuring, dispensing, administering, and appropriate utilization of medications are also included in the system. Formulary systems often contain additional prescribing guidelines and clinical information that can assist health care professionals in promoting high-quality, affordable care for patients. As a result, formulary systems and formularies both need to exist within clinical pathways, providing synergy rather than any potential conflict. Specifically, this means that it is critical for the clinical pathway steps to access treatments be in line with the formulary. Imagine the difficulty for clinical pathway users if the guidance provided required a specific set of steps to access a treatment, which was very different from that of the formulary. With the proliferation of outpatient formularies and clinical pathways, this alignment will be increasingly critical.

While historically the pharmacy and therapeutics (P&T) committee was simply responsible for developing, managing, updating, and administering the formulary, their role has slowly been expanding—growing both in terms of what factors need to be taken into account for inclusion and exclusion as well as the application of these formularies within clinical practice, which often requires application within clinical pathways. These considerations are critical for successful clinical and financial outcomes.

AMCP has defined the P&T committee role as one that focuses on the review of some or all of the following:

  • Medical and clinical literature including clinical trials and treatment guidelines, comparative effectiveness reports, pharmacoeconomic studies, and outcomes data;
  • Food and Drug Administration (FDA)-approved prescribing information and related FDA information including safety data;
  • Relevant information on use of medications by patients and patient experiences with specific medications;
  • Current therapeutic use and access guidelines and the need for revised or new guidelines;
  • Economic data, such as total health care costs, including drug costs;
  • Drug and other health care cost data (not all P&T committees review drug specific economic data); and
  • Health care provider recommendations.

Again, in the past, when 2 or more medications produced similar effectiveness and safety results in patients, then business elements like cost, supplier services, ease of delivery, or other unique properties of the agents were considered when determining which agent to include on the formulary. This list of considerations has expanded as health systems are now being held responsible for a range of clinical and financial obligations such that today’s P&T committees evaluate treatments based on performance in delivery of these new health system accountable outcomes.

Health System Outpatient Formulary

Before health systems, there were hospitals, each with their own inpatient formulary. These formularies were controlled by a strict P&T committee focused on reducing pharmaceutical costs and length of stay. Today, hospitals have evolved to health systems with an increasingly large outpatient care network and even their own health plans. This has resulted in health systems often having 3 separate formularies based on very different priorities and means to implement (Table 1).


Today health system outpatient formularies are required because of ACOs and other at-risk models delivered through their own networked providers. But these health system outpatient formularies have a very different structure, basis for treatment selection, level of control, and even contracting and payment of treatment differences.

Most significant is that while these outpatient health system formularies are not direct purchases of pharmaceuticals, like a hospital inpatient or health plan, these groups still have the ability to limit or promote use of specific products. As a result, pharmaceutical manufacturers are best served by engaging this new channel to ensure appropriate utilization. These preferences of the health system outpatient formulary are then being embedded into clinical pathways to drive appropriate use. 


All stakeholders need to appreciate this proliferation of formularies from one hospital inpatient, to health plans and now to outpatient health system formularies. Understanding these relationships and interactions will allow clinical practice developers to be more useful with how they develop and provide for flexibility. This will be especially critical as new, currently unthought-of formularies come in to use through strange bedfellows such as CVS/Aetna, Cigna/ExpressScripts and Amazon/JPMorganChase/BerkshireHathaway and others not even thought of as possible. 


1. Academy of Managed Care Pharmacy (AMCP) Board of Directors. Formulary management. AMCP website. Published November 2009. Accessed March 27, 2018.